Saeed Shabram, who drowned at Basra in 2003 after being detained by British troops

The Ministry of Defence has agreed to pay £100,000 compensation to the family of an Iraqi teenager who drowned near Basra after being detained by British troops. In an out-of-court settlement with his relatives' British lawyers, the MoD did not admit liability for the death of 18-year-old Saeed Shabram in May 2003.

His cousin, Menem Akaili, who claims he was forced into the Shatt al-Arab river by soldiers at the same time, will also receive an official payment.

Akaili said that he and Shabram were approached by a British patrol and led at gunpoint down to a jetty before being forced into the river. The punishment was known as "wetting" and said to have been inflicted on local youths suspected of looting.

"Wetting was supposed to humiliate those suspected of being petty criminals," said Sapna Malik, the family's lawyer at Leigh Day and Co. "Although the MoD denies that there was a policy of wetting to deal with suspected looters around the time of this incident, evidence we have seen suggests otherwise.

"The tactics employed by the MoD appeared to include throwing or placing suspected looters into either of Basra's two main waterways."

Iraqi bystanders dragged Akaili out of the water but his cousin disappeared. Shabram's body was later recovered by a diver hired by his father, Radhi Shabram. Shabram's mother waited on the river bank for four hours, screaming and crying, while the diver searched the river. "When Saeed's corpse was finally pulled from the river, Radhi describes how it was bloated and covered with marks and bruises," said Leigh Day.

Akaili said: "I feel as though what happened to Saeed was totally pointless. We begged the soldiers to show us mercy but they ignored us, killed my dear friend and nearly killed me." None of the four soldiers said to have been involved was charged. The initial stage of the official investigation into the drowning took more than three years.

According to Malik, another Iraqi teenager, 15-year-old Ahmed Jabbar Keeram Ali, drowned in "very similar circumstances" in the same river a fortnight earlier after being apprehended by British soldiers.

A spokesperson for the MoD said: "When compensation claims are received by the Ministry of Defence they are considered on the basis of whether or not there is a legal liability to pay compensation. In this case we came to an amicable settlement and our sympathies remain with Mr Shabram's family."